Caterpillar posted second-quarter earnings early Tuesday that trounced estimates, as stock buybacks and higher prices helped offset lower sales. After sketching out a solid full-year outlook, shares of the Dow Jones earthmoving giant moved higher in volatile trade.
Caterpillar Earnings
Estimates: Analysts expected adjusted earnings per share of $5.54, down 2% from a year ago. Revenue was seen slipping 3.7% to $16.68 billion.
Results: Caterpillar posted adjusted EPS of $5.99, up 7.9% from a year ago, as revenue dipped a hair less than expected to $16.69 billion, down 3.7% from a year ago.
Caterpillar's results were flattered by fewer shares outstanding, after the company launched an accelerated stock buyback program. Including $1.8 billion spent on share buybacks in Q2, Caterpillar cut the number of outstanding shares by 5%, contributing about two-thirds of the year-over-year adjusted EPS growth.
The rest of the year-over-year earnings beat came from Caterpillar's continued margin improvement, helped by higher prices. In February, Caterpillar raised the top end of its outlook range for adjusted operating margin by 100 basis points at any given level of sales.
Caterpillar's cash holdings at the end of Q2 stood at $4.35 billion, down from $7.39 billion at the end of 2023. That suggests a limit to accelerated stock buybacks.
Outlook: Caterpillar said sales will be "slightly higher" in the second half of the year than in the first half. That's roughly in line with analyst estimates and typical seasonality.
However, the company guided to lower adjusted operating profit margins in the second half of the year.
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CAT Stock
Caterpillar stock rose 3.1% to 326.65 in early Tuesday stock market action. On Monday, CAT stock held to a 1.3% decline amid the Dow Jones and broader stock market rout.
Last week, as soft jobs and manufacturing data sparked recession worries, CAT tumbled 8.45%, knifing through its 50-day moving average, which is around 335.
After tumbling 5.2% in the past three sessions, the worst stretch since June 2022, the Dow Jones is 6.1% below its record closing high, though still up 2.7% for the year.
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